Canadian Merchant Accounts – 8 Questions You Need to Ask!
October 29, 2008 by Admin · Leave a Comment
Reading the current article top to bottom will give you an excellent understanding of Merchant Account Services in Canada.
In this day and age, it can be difficult to find a Credit Card Processing supplier that offers it “ALL“, finding one single provider that is the “best” at everything just doesn’t exist.
Merchants need to be practical and smart about making merchant account service decisions, you need to think twice before coming to a final decision or you may find yourself stuck with an agreement that may not be “right” for your companies merchant account needs.
Here is a valuable list of questions you want to ask yourself before applying for merchant account services are:
1. What will be my average sale amount per customer?
This will determine your Discount Rate on credit cards.
2. What will be my expected monthly business sales volumes on each card?
This also helps determine your discount rate on credit cards. The usual rule of thumb is: the lower your average sale amount and the higher your sales volume the lower your Discount Rate will be.
Now don’t make fake numbers up when applying for credit card processing account(s) to try to acquire lower rates. The credit card processor will realize your transactions are not what you claimed them to be on your initial application. In result, they will jump your Discount Rates ASAP and/or put a hold on your funds, in case of plausible chargebacks. A Merchant Account supplier can hold your money for up to Dozen months too, so being completely transparent about your business’s transactions and volumes is exceedingly important.
3. How do expect to process transactions? Face-to-face, over the phone, fax, mail-order, internet?
This tells the merchant account providers your “risk” value. Card present transactions are considered the lowest risk while any type of transaction that falls under the MO/TO (mail-order/telephone-order) umbrella as being the highest “risk” for credit card fraud. This affects your credit card Discount Rates.
4. How many transactions do I expect to do a day?
This will tell you what type solution you will need and how you should connect that solution. For fast transactions you will want to connect via the high-speed internet.
5. Will I have peak times that require speedy transactions?
Similar to as above, but you may want to have two Credit Card Machines for busy times to increase check-out speeds. As they say. “Time is Money!“
6. Is there a mobile or trade show factor to my business?
You may require a wireless machine to fulfill your mobile components to your business.
7. Is my business seasonal?
If your business is seasonal you can save yourself a lot of money by applying for a seasonal credit card processing account. Basically, during your off-season you will have zero fees. Allowing you to only pay when you need the services as opposed to applying for a regular merchant services account and being charged for minimum processing fees during your off-season.
8. What types of cards do I expect to receive? Consumer cards, business/corporate cards, international cards?
This important to know for two reasons. One being, that you will not be surprised by your “Mid-Qualified” and “Non-Qualified” fees. These fees are charged on top of your “Qualified” Discount Rates.
Two being, you will know to ask how the merchant account company structures their “Mid’s” and “Non’s”. By knowing this you may find out that one company is less expensive then another after knowing their “Mid’s & Non’s” if a lot of your transactions fall under those premium rates. Do not expect a merchant account company to be transparent about these rates. They make their money by what you don’t ask.
By knowing how your business will handle payment processing, will enable you to provide the ‘right‘ info to your merchant account sales rep, so they can best recommend the proper solution for your business needs.
If you do not ask the ‘right‘ questions then you risk finding yourself in a merchant account agreement that does not fit your business needs.
If you liked this post and want a even more in depth look at merchant accounts you may want to take a couple of minutes and read this FREE report titled, “The Critical Payment Processing Guide for Canadian Merchants“
Canadian Merchant Accounts – Stop Sticking It To Us
October 28, 2008 by Admin · Leave a Comment
The word on the street is that more and more Merchants are finding the cost of using credit card processing services to be getting too expensive. This year credit card companies have had two adjustments, one in April by Visa and one recently in Oct 1st, 2008 by MasterCard. These adjustments have created (for most merchants) a three-tiered rate charges. These rates are usually called “Qualified“, “Mid-Qualified“, and “Non-Qualified“. Now each merchant account provider deals with the interchange adjustments differently.
This has caused a real upheaval with many Canadian Merchants and their relative associations that they turn to help them negotiate lower cost merchant account fees. Derek Nighbor, senior vice-president of national affairs for the Toronto-based Retail Council of Canada (RCC) is leading a coalition group called “Stop Sticking It To Us” that is challenging the rate hikes with Canadian Merchant Account services.
The coalition includes 16 groups, including the Canadian Convenience Stores Association, the Canadian Jewellers Association, the Hotel Association of Canada and the British Columbia Restaurant and Foodservices Association.
CFIB president Catherine Swift sent out a letter to their members in Sept 2008 explain how the credit card companies want to enter the debit market up here in Canada, which would could potential drive up costs by 10,000%. An example of how a current transaction fee on debit can be as low as 9 cents, but if we followed the US debit fee structure which is based on a discount rate + plus a transaction fee and now merchants had to pay an average of 0.9% on all debit sales volumes, that same $1000 transaction would now cost the merchant $9, as opposed to today’s current fee of 9 cents. That is a pretty huge increase – could you imagine taxes going up by 1000% over night, or you gas prices…? The world would turn upside down.
These changes are real and are happening. We found another article titled “Merchants miffed by credit card fees” written by Steve Proctor that again is discussing the merchant account hikes with local business owners in Halifax. These hikes are coast to coast across Canada.
One of the biggest problems to these rate hikes is the lack of transparency. Just see what Alan a commenter on Colin’s Blog post titled, “Interchange and how it is the next new problem for consumers in Canada” has to say.
We understand that many merchants are perplexed by these changes and hope to help alleviate the burden of confusion caused by all the different levels of interchange. A good resource many of our clients have found insightful to understanding how Canadian Merchant Accounts work is by reading our FREE guide called The Critical Payment Processing Guide for Canadians.
We think it is very important that merchants ban together to keep rates and fees down. These hikes during any time can be hard to deal with, but during these economic times it can be devastating.
The bottom line is most merchants have just witnessed a 20% hike in their fees with this year’s interchange adjustments. It is essential now to know how your credit card company handles their “Qualified“, “Mid’s“, and “Non-Qualified” transactions. Then you can look at how your business processes transactions and find a company that best suits your individual business needs. The good news is, there are now many other private label merchant account companies in Canada that are looking to compete with the big five banks and now may be a good time to get a comparison quote done to make sure you are securing the most competitive rates.
